Beware European Key Risks: Godfrey

European elements that could imperil the stock market include Italy, Cyprus and Slovenia, says Gemma Godfrey of Brooks MacDonald Asset Management.

European risks that could imperil the U.S. stock market rally could come from Italy, Cyprus and Slovenia, Gemma Godfrey of Brooks Macdonald Asset Management said Thursday.

"There are still key risks that are out there," she said. "If we look at it from an economic standpoint, you've got the Italian election uncertainty, which obviously has a cloud over the market until they're able to push forward with reforms

"Secondly, Cyprus, although potentially we have moved on a stage, it has set a new precedent in terms of harsher bailout terms, which again could shake other countries going forward. And because they were so specific in their capital controls, again, that could create crack in the contract."

On CNBC's "Fast Money," Godfrey said that another concern comes from nonperforming loans in Slovenia, which have exceeded 20 percent.

That, Godfrey added, could require the small European Community nation to recapitalize its banks.

"So although small in size, these three different areas could shake markets over the next quarter," she said.

Godfrey said that the U.S. stock rally didn't tell the full story.

"I would actually say there are underlying signs of nervousness," she added, particularly in debt markets.

"For example, we are seeing risk aversion. CDS spreads, the cost of insuring periphery bonds, has risen. We are seeing outflows in the equity markets. The last week the European equities saw the largest outflow since August."

Trader disclosure: On March 28, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Stephanie Link is long AAPL; Stephanie Link is long GS; Stephanie Link is long CSCO; Stephanie Link is long FB; Stephanie Link is long IBM; Josh Brown is long AAPL; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long TLT; Josh Brown is long WMT; Josh Brown is long HES; Steve Weiss is long BBRY; Steve Weiss is long TBF; Steve Weiss is long LCC; Steve Weiss is short JCP; Brian Kelly is long TREASURIES; Brian Kelly is long GOLD; Brian Kelly is long SILVER; Brian Kelly is short COPPER; Brian Kelly is short S&P; Brian Kelly is short CAC; Brian Kelly is short DAX; Brian Kelly is short EUROSTOXX; Brian Kelly is short KOSPI.